The French carmaker Renault signed a multimillion-dollar deal in Tehran on Monday, agreeing to raise vehicle production in Iran just days after President Trump signed into law new sanctions against the country.
The roughly $780 million agreement to produce as many as 150,000 additional cars a year is the largest foreign auto deal in Iran’s history, state-run PressTV said. It was a victory for President Hassan Rouhani, who was sworn into office on Saturday after being re-elected this year promising to revitalise an economy hurt by sanctions.
Iran, an Islamic republic, is increasingly attracting foreign investors, despite restrictions imposed by the United States over its missile program and its military activities in the region.
Its economy has limped along, surviving mainly on oil sales in recent years, with youth unemployment topping 40 per cent and the state controlling many sectors. American restrictions stop most international banks from providing financing or credit to Iran, and the country is cut off from international payments systems for using debit and credit cards.
On Wednesday, President Trump signed into law new sanctions against Iran, Russia and North Korea. It is unclear if the Renault deal violates any unilateral United States trade barriers still in place against business with Iran.
Still, the agreement to establish a joint venture with a government-run conglomerate is welcome news for Iran. Renault has pledged to open two factories with Iranian partners.
One partner, the Industrial Development and Renovation Organisation, a government conglomerate known as IDRO and which controls 117 companies, was long under sanctions by the United States and Europe which accused it of supporting Iran’s missile program. Those sanctions were lifted under Iran’s nuclear agreement with world powers last year, which allowed Renault and other foreign companies, including the American plane manufacturer Boeing, to do business with the country.